Neobanks, the next evolution of banking industry

The finance industry has undergone a more significant transformation in the last two years than in previous years. Neobanks are now heralded as the future of banking- with zero legacy baggage and endless technological possibilities to enhance the customer experience and streamline complex banking processes.

Economic uncertainty, rapidly evolving customer requirements, increased competition from new-age banking, and fast-accelerating technological equipment have entirely transformed the banking ecosystem, forcing traditional banks to reenergize their long-term vs. short-term goals.

Causes of disruption in the digital banking

Evolving customer behaviour

Competition from new-age players

Financial risk

Regulatory changes

Economic Uncertainty

The Rise of neobanks

In today’s world, the banking industry is evolving around the landscape of customer satisfaction. Customers began to incline toward fintech solutions, allowing them to integrate their traditional bank accounts and perform all the banking functions under one application. The Rise of Neobanks has been seen everywhere by offering lower-cost models and hyper-distinctive customer-centric service and experiences. As per the reports shown by the survey company:

In fact, LATAM countries have shown an even more significant satisfaction gap between the two solutions:

The Rise of Neobanks

In fact, LATAM countries have shown an even more significant satisfaction gap between the two solutions:

Some unique dilemmas that Neobanks face

Undoubtedly, neobanks are multiplying rapidly to offer incredible opportunities that hold the potential to disrupt the financial services market. ECS Fin sees some unique dilemmas that every neobank face while thriving in the industry.

These dilemmas should be cautiously addressed before venturing into this new journey. A bold vision and careful planning should be hammered out for a sustainable and profitable banking business while quenching customer requirements. Below are three dilemmas that require strategic planning to pave the way to success.

Dilemmas:

Value vs. Growth:

Many neobanks emphasize attracting an influx of customers soon after their launch in the market. It should be well-noted that attracting customers through convenient applications or niche services will not reward them for their long-term goals. Rather, neobanks need to earn their customers’ trust so they can comfortably start depositing pay checks and make their neobank account their primary account. So, this customer confidence and long-term value should be built into the strategic design.

Evolution vs. Emulation:

As soon as the business starts thriving and becomes profitable, many neobanks have faced the temptation to consolidate services and act more like a traditional bank. It should be well-noted that neobank values come under the hood of customer-centric strategies that work beyond conventional banking requirements. A culture of agile decision-making and innovation will allow neo banks to learn fast and adapt to a moving target of customer expectations.

Loyalty vs. Comfort:

With the evolution of neobanking and an open API ecosystem, customers can open an account in minutes and enjoy niche banking services at their fingertips. Neobanks must move from garnering the interest of curious new users to building loyalty and trust to derive long-term value from their customers.

Facing these issues and selecting a path that delivers profitability and sustainability begins with understanding the key purpose of having a neo bank. It would be well-suited if you could brainstorm for the neo bank’s entire lifecycle- from envisioning the product to designing it, building it, running it, and eventually scaling up or executing your exit plan.

How does ECS Fin Work?

Owing to the unique functionalities and features of IMS Payments, ECS Fin aids neobanks in developing, configuring, and deploying agile solutions system that allows banks and financial institutions to conduct and manage financial transactions.

The modern Enterprise Payment Hub will enable neobanks to grow their business at scale, diversify their product offerings with ease and benefit from evergreen software updates. The strategic partnership will allow joint customers to accelerate the launch of new payment products and services without dismantling and replacing existing systems.